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Global Powers of Retailing 2006
A supermarket sweep?

Audit Tax Consulting Corporate Finance

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Contents
Beyond retail therapy Global powers top 250 highlights 50 fastest growing retailers, 1999 – 2004 Top 250 global retailers Top 250 global retailers alphabetical listing Share and share alike? A world of opportunity Seven deadly things Global consumer business team 1 2

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“Retailers will need strong risk management skills to navigate the minefields as globalisation adds ever greater complexity to the retail business model.”

This report has been reprinted from the 2006 report by Stores Magazine. STORES is the magazine of the National Retail Federation (NRF), the world’s largest retail trade association.
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Global Powers of Retailing2006 Beyond retail therapy

Beyond retail therapy
Managing risk and reward: New challenges for retail leadership
Deloitte, in conjunction with Stores Magazine, are pleased to present the ninth annual Global Powers of Retailing. This report identifies the 250 largest retailers around the world based on publicly available data for the companies’ fiscal year 2004 (July 1, 2004 – June 30, 2005). Italso provides an outlook for the global economy and an analysis of retail stock price performance. New this year is a discussion of the major risks facing today’s retailers.
The global economy has continued to perform reasonably well, lifting retail sales and profitability. However, heightened concern about the growing risks facing retailers is changing the management agenda from one of managingfor profitable growth to one of managing and mitigating risk. A whole portfolio of risks is making global sourcing and operations not only much more complex, but also much more precarious. As a result, there is growing awareness among senior management and corporate directors in the retail industry – whose risk management agendas have heretofore been focused primarily on financial integrity issues– of the non-financial risks confronting their organisations. As retailers raise their exposure in global markets, they must contend with the many inherent and well-known problems of doing business in international markets, including currency fluctuations, reporting and tax rules, poor infrastructure, potential for sudden political change, and uneven economic growth. Long-distance sales anddistribution processes become more difficult to manage. Local consumer preferences need to be considered. Barriers to entry need to be overcome. However, retailers also face increasing risks in other areas that are less well-recognised or understood. The nature of global commerce now requires retailers to take into consideration a number of serious issues that did not exist, at least not on the samescale, only a few years ago. Being a good global citizen – minimising a company’s impact on the environment and maximising benefits to the communities in which it operates – is becoming an increasingly important topic on the corporate risk management agenda. Food safety concerns and product counterfeiting are having significant repercussions throughout the global supply chain. The proliferation ofown brand products is requiring retailers to take on financial and reputation risks associated with their private brands. Retailers with strong brand names and global profiles are at greater risk from terrorists and must develop plans for business continuity should an attack occur. Being big in itself means closer scrutiny of operations from the outside, including being subject to increasinganti-trust legislation and shifts in public perception. All of this added “sand in the gears” will make the achievement of profitable growth much more difficult for retailers in the years ahead. The cost of managing risk will be high, which will eat into short-term profits. In the longer term, greater risk aversion will likely inhibit growth. Retailers that don’t take the risks will not reap the...